Start saving or keep paying down debt?

iVillage Member
Registered: 01-06-2005
Start saving or keep paying down debt?
5
Tue, 08-23-2005 - 3:31pm

I would like some advice please.

We have about $100 in savings right now. (Not really even worth mentioning....) We are bringing in enough money right now to start knocking away some of the debt. (credit cards are $8,150 and we have a few other debts as well)

DH wants to put some money into savings right now. I am hesitant, as that means a longer time for us to be paying outrageous interest rates on the outstanding money owed.

What do you think? Should I just keep plugging away at the debt? Or should I just pay minimums for awhile while we build up our savings? And how much is an adequate savings (in YOUR opinion)?

Thanks in advance!
Jennifer

 

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iVillage Member
Registered: 04-11-2005
Tue, 08-23-2005 - 6:39pm
Since you say you've got $1k in savings right now, I'd just keep plugging away at the debt!

Lara

 

iVillage Member
Registered: 09-07-2003
Tue, 08-23-2005 - 8:20pm

Congrats on having some savings, and for having discussions and making a plan to get out of debt!! :)

Increasing your savings to $1000 while making minimums on your CCs is a pretty standard practice around here. I know it seems silly to have $1000 in savings when you could use it to cut off 1/8th of your total debt....but the idea is that if an emergency happens down the road, you wont have to go back to using your CC is you have some savings.

As to how much is enough...there are a lot of variables, in my opinion. For me, im single and in an area where there are always jobs....not neccessarily Good jobs, but at least WORK. and I have a LOT of debt. so I'd be happy iwth 1 months worth of savings, for now.
But, if I had kids, or was in poor health, or in an area where employment was hard to come by and if I lost my job tomorrow it could be 3 or 4 months before I found a job, even workign at a gas station or fast food....then I'd want more.

If I were you, I'd agree with your DH on a Bare Minimum amount...whether thats $1000 or 1 months worth of normal expenses or whatever...and then on the Goal amount. then, make paying to your savings account one of your monthly "bills" and budget in a set amount...whether its $20 or $200 that you will add to saving every month until you reach the goal. that might give you both the peace of mind..him of having that money in savings, you in knowing you're not taking bill money just to put in savings. :)

HTH,

~ Teresa

Teresa
http://www.affordingpickles.blogspot.com

iVillage Member
Registered: 08-19-2003
Tue, 08-23-2005 - 8:22pm

Well everybody recommends having the $1000 before attempting to pay off the debt.

I personally am working on the debt. I am going to pay off one credit card, and then I am going to build my ef up to $1k (currently direct deposit $100 a month), and then finsish paying off the large credit card.

Our income/jobs are dependable and we have a good chunk of money each month for debt repayment. I would rather out the money on debt, and "if" an emergency came up that I could not work into the budget, then use a cc to pay for it.

But this is my plan, it may not work for you. It may make more sense for you to have the ef.

Shannon

Shannon


Pregnancy%20ticker
iVillage Member
Registered: 01-06-2005
Wed, 08-24-2005 - 2:43pm

Okay, I've got my savings up to $170...again, not really worth mentioning...

Hopefully we won't have any "emergencies" any time soon!

I'm still not sure what to focus on. For now, I'm going to make "savings" a "bill" each month.

Thanks for all your input, ladies!
Jennifer

 

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Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Wed, 08-24-2005 - 3:05pm
I agree with others that once you have 1K in the bank, you can go more hogwild with the debt payments.

All my best,
Danni